The Twelve Olympians by Monsiau, circa late 18th century
Introduction
There is no unanimity among scholars and practitioners on the meaning of strategy. Texts on the subject discuss strategy from different and sometimes contradictory perspectives. The only issue, over which there is little debate, is the origin of the term strategy. “In its original sense, strategy (from the Greek word, Strategos) is a military term used to describe the art of the general (Harvard Business School, 2005, p. xi).
This art is about plans for troop deployment in battles to win wars. Many writers acknowledge that the concept of strategy has military origins, with Sun Tzu’s “Art of War” being one the oldest treatise on strategy. Businesspersons seem to enjoy using military analogies to conceptualize the running of businesses in the modern world.
Indeed, the pressure of keeping a business afloat amidst a very volatile operating environment that the world has become can feel like war. It is the goal of this paper to seek to uncover the essential components of strategy and the process of formulating a coherent organizational strategy in the context of the built environment.
Amid the differences that exist as to what strategy is, it seems more beneficial to embrace a wide-angled view of since each of the viewpoints has merit and contributes to the overall understanding of the concept.
It is the approach that Mark, (2004, p. 11) advocates for in the context of business when he states, “One of the greatest benefits of a comprehensive approach to strategy is the surfacing and exploitation of multiple sources of attractive growth”. However, this growth should give due considerations the internal resources availability for now and for the future.
Essential Components of Strategy
The first essential component of strategy is action. The Harvard Business School (2005) states, “Strategy is about doing the right things” (p. xi). Actions reveal an organizations strategy. A deliberate strategy informs its actions. However, actions not based on a defined strategy still qualify for consideration as part of organizational strategy. Secondly, strategy refers to a plan.
Henderson (1991) states, “Strategy is a deliberate search for a plan of action that will develop a business’s competitive advantage and compound it” (p. 5). This plan informs the actions undertaken when the strategy is deliberate. Henderson (1991) assumes that all strategy must be formally planned. In the context of strategy, it is not the formalization of a plan but the deliberate choices a business puts in place that counts.
Another view forwarded by the Harvard Business School (2005) about strategy is that it is a resource control and utilization plan meant to protect the central interests of an organization. These resources include finances, physical infrastructure, and human resource. This view accomodates the lack of a deliberate centralized conventional business strategy made through a formal process.
It simply refers to the arrangement of those resources in a sensible manner towards certain ends. Competitive advantage is the motive behind strategy. Robert (2005) succinctly states, “Strategy is about winning” (p. 4).
This view is supported by Porter (1991) who states, “the essense of strategy formulation is coping with competition” (p. 11). The idea expressed reveals the intentional use of a plan to out-perform business rivals using unique traits of the organization in order to survive, and hopefully thrive. In this case, strategy answers the need to be the best among competitors.
The fifth essential component of strategy revealed by Robert (2005) is organizational identity. He states, “At the most basic level, strategy making extends beyond questions of resource deployment and market positioning to address fundamental questions such as: what is our business? What are we trying to achieve?
What is our identity as an organization?” (Robert, 2005, p. xi). This approach requires the organization to understand itself first before venturing out into the market with a clear direction. Wall (2004) agrees with this approach showing that strategy provides an organization with a “coherent sense of direction”, which is yet another essential component of strategy (p. 4).
This coherence makes it possible for all members of the organization to act in a coordinated fashion, which is essential for the success of a business. This holds true for small firms as well as large corporations. The final essential component of strategy is context. Successful strategy is very contextual.
“As soon as we move beyond general notions to more precise definition, then these depend upon the type of arena within which strategy is being deployed” (Robert, 2005, p. 7). This element accounts for the disparities in the views on strategy since some of the viewpoints are highly contextalized.
Increasingly, in this era of multinationals and globalization, context is more difficult to delineate especially geographically, yet to ignore context when developing strategy is to court disaster.
Towards a Unified View of Strategy
Based on the viewpoints above, Mark (2004) seems to have developed the most comprehensive definition of strategy. He states, “Strategy is about raising and allocating resources, setting priorities, directing organizations, and demonstrating through decisive behaviour what will be done – and what will not – in the pursuit of a larger vision, goal, mission, or high level set of objectives” (Mark, 2004. p. xv).
His definition is broad enough to capture most of the essential elements of strategy thereby avoiding the problem of high contextualization. It is also wide enough to cover the specifics of strategy that are valid in the strategic management of all organizations. This makes it useful in understanding the concept of strategy. Its other strength is that it leaves room for looking at strategy as either deliberate or consequential.
The elements defined here do not require a centralized approach to strategy development but even if it is there, it does not disqualify it. Its major weakness is its lack of enviromental cognisance. It does not account for environmental factors that greatly influence the preparation and execution of strategy.
This goes to demonstrate that the process of developing a unfied view of strategy is a work in progress, and still requires effort to sysnthesize the essential elements into a comprehensive definition of strategy. This preferred view must include the nine essential componenents identified above and in addition it must allow for both the deliberate and consequential nature of strategy.
A definition that meets the above criteria will still be somewhat incomplete since there is still the problem of universality versus contextualization. The following is an attempt to redefine strategy to meet this criteria presenting a wider understanding of the concept.
Strategy is a set of actions, planned or otherwise that influence resource acquisition and allocation, deployed for the express purpose of attaining competitive advantage based on a clear organizational identity expressed in terms of its place, power, problems and potential, which informs its direction and actions within its environmental context.
This definition captures all the essential elements identified but its rather cumbersome. It is long and may not appeal to the wider audience who actually need a concise definition to capture the essence of strategy. Probably, the sensible thing to do is to settle for a simplified global definition, while providing working definitions for each field, as writers have already done.
The Strategy Process
As expected, there is no universality in the recommendation of an ideal process for strategy development. There are different views on it. “Henry Mintzberg and his colleagues at McGill Unversity distinguish intended, realized and emergent strategies”. (Robert, 2005, p. 14). Intended strategy is the one the organization deliberately plans and positions itself to implement.
Emergent strategy is the one which developes unwittingly as an organization responds to evolving issues. When these two strategies interact, the result is the realized strategy which is the strategy the organization finds itself implementing. These three strategies are the result of three concurrent processes and they demonstrate the organic nature of strategy.
Strategy therefore is not a static process but a dynamic one that evolves and requires regular refitting. There is much concurrence though when looking at strategy as a process. In fact, there is a deliberate encouragement that organizations should take an active role in the developement of their strategy, other than waiting for one to emerge as they undertake their daily business.
The Harvard Business School (2005) states, “strategy creation and its implementation should be approached as a process” (p. xvi). The school proposes a five level process for strategy development that is useful in understanding the strategy process.
The steps in the process are developement of a mission, followed by identification of organizational goals. Thirdly, there is the actual strategy development succeeded by the strategy implementation process. The final level is performance measurement.
The first level of strategy development is mission. “Strategy creation follows from the mission of the company, which defines its purpose and what it aims to do for customers and other stakeholders” (Harvard Business School, 2005, p. xvi). Mark (2004) underscores the importance of mission when he says that the identification and action upon a particular set of issues determines the success of a business.
When the organization is clear about its priorities, then it can sucessfully engage in determining what is essential to its operations for success. The mission sets the rules governing its key relationships and functions. The next level is the identification of goals.
“Strategy creation typically begins with extensive research and analysis and a process through which senior management zeros in on the top priority issues that the company needs to tackle to be sucessful inn the long term” (Harvard Business School, 2005, p. xvii). There is a difference in opinion as to the direction of flow of the process, and whether it is the top management that is best placed to set organizational goals.
They have the tools and the authority but they lack in understanding of frontline issues that are key in implementation. Frontline staff on the other hand have clear views on what is not working for them but they lack the organizational overview. Probably, a middle line where the management gets input from the frontline is the best way around this challenge.
Once the goals are set, strategy creation takes place. It involves determining the internal and external forces followed by the identification of the choices that the organization has to achieve its objectives. Many tools are used to examine the organization’s capacity to settle on a particular organizational strategy after an environmantal scan.
While The Havard Busienss School advocates for SWOT as a method of conducting an enviromental scan, Robert (2005) feels that this approach is difficult to implement in practice and he advocates for a two way analysis of the environment, looking at internal and external factors. He contends that its not the four way classification but the “rigor and depth” in the analysis of these factors that counts (Robert, 2005).
Another popular tool worth mentioning used to conduct an evironmental scan is the Porter’s Five Forces Analysis. This tool is useful when the organization’s bottom line is the impetus driving the organization’s effort in undertaking a stategic planning process. There is lesser contention on who developes organizational strategy.
Many writers agree that “the job of creating an organization’s strategy over time falls to senior managers” (Walker, 2004. p4). The forth step in the strategy process is implementation. “A strategy that is formulated without regard to its implemetation is likely to be fatally flawed.” (Robert, 2005, 14).
In pushing the case for more frontline involvement, Daughtry and Casselman (2009) state, “Vision and strategy, critical though they are, are virtually useless without consistent execution right down to the frontlines” (p. 1 ). This requires good communication along the ranks of the organization.
They add that “Strategy has to be translated into the language and actions appropriate to each level in the organization” (Daughtry & Casselman, 2009, P.5). The final level in the strategy process is performance measurement. This lacks in organizations that do not have deliberate strategy. They do not know what to measure since they have not categorically stated what their goals are.
This five-step process is more useful as a conceptual model than as an actual implementation process. Wall (2004) warns that things do not work out this neatly in the real world where forces shift suddenly and without warning. Perhaps it is best to look at strategy development as “an iterative process that begins with a recognition of where you are and what you have now” (Henderson, 1991, p. 6).
New information and circumstances feed into the old circumstances forcing us to change and adapt our methods. The role of strategic management is to ensure that the changes in the environment do not adversely affect the organization’s long term view, but that the organization prepares in advance to take advantage of these changes.
Application of Strategy-Strategic Fit and Strategic Foresight
Just like other organizations, construction companies exists within a certain environment defined broadly by the natural environment, demographic structures, social structures, legislative processes, technology, and economy. This environment has an immediate impact on their interest’s interests and influences everyday decisions.
In addition, they have their own unique internal environments defined by organizational culture, resources outlay such as level capitalisation and expertise, and business processes defining how they find and execute construction contracts. The internal environment influences the realization of their aspirations and the momentum they sustain towards their realization.
Certain other forces much larger in dimension constitute the business climate of companies in the built environment. These include the macroeconomic trends, political issues, and global trends. Montgomery and Porter (1991) observe, “Increasingly, both business units and corporations must compete globally” (p. xv). Dalic (2007) calls it “the convergence of cultures” (p. 4).
The climate has long-term impacts on the industry though it may be a while before a particular company begins to feel the impact of climatic changes. They are a very strong motivation behind the strategy process. Before a construction company develops its strategy, it is beneficial and maybe crucial for it to determine what its environment looks like.
This allows it to forecast the impact of its present actions thereby providing it with the range of presently available options and the limits within which it can operate profitably. The application of strategy and the strategy process allows an organization to determine two important contexts in strategic planning and strategic management. These are strategic fit and strategic foresight.
Strategic Fit
Strategic fit looks at the present. It refers to the process where an organization examines its current position to ascertain whether it is sitting squarely on its best possible footing or whether there is a mismatch, based on its objectives. In the built environment, a company looks at whether its level of staffing and financing corresponds to the available opportunities.
The resulting plan from the process is a strategic plan to give the organization a better placement within its business context. Robert (2005) recognizes the need for strategic fit when he states, “For a strategy to be successful, it must be consistent with the firm’s external environment and with the characteristics of the firm’s internal environment- its goals and values, resources and capabilities, and structure and systems” (p. 14).
Construction projects normally take very long from ideation to completion, and it is normal for very drastic changes in the business enviroment to occur within the life of the project. By seeking to attain strategic fit, a construction company ensures it takes advantage of the present opportunities which may dissapear because of environmental change.
Strategic fit is the result of implementing measures concluded upon after conducting an environmental scan during the strategy process. Strategy and the strategy process may provide organizations in the built environment with the ability to determine their strategic fit to ensure that they are currently using their resources to the best effect.
However, due to the dynamic environment in the present business context, for a small outfit such as small to medium enterprise construction industy, the strategy process considerations may pose challenges to them in utilizing their resources to the best outcome as it is somewhat restrictive in terms of time, cost and resource availability.
Strategic Focus/Foresight
On the other hand, strategic foresight, also known as strategic focus, refers to the preferred position of an organization usually at some point in the future. By looking at the medium and long-term opportunities, a construction company may find certain desirable positions they would prefer to occupy at that future date.
Strategic foresight considers all the forces acting on the business environment within which the organization operates and seeks to determine their impact on the long-term objectives of the organization. This prepares it to take advantage of arising opportunities and prepares it to handle future challenges. “One of the biggest challenges facing executive teams is lack of strategic focus” (Daughtry & Casselman, 2009, p. 7).
Its long-term nature makes it easy to ignore especially for small construction companies with severe resource constraints. The pressure of the present seems to make strategic foresight an unnecessary burden on already overworked executives.
By drawing on strategy and the strategy process, a construction company creates strategic focus on its executives, thereby preparing them to handle the challenges the company will face in the future. It assures the long-term survival of the company. It is tempting to look at the strategy process in terms of strategic foresight without considering the implications of strategic fit on the desired future.
Organizations in the built environment need to know that strategic foresight without strategic fit results in “a plan for the future without a plan for the present” (Wall, 2004, p. 13). On the other hand, strategic fit without strategic focus gurantees the present at the expense of the future.
Hence, the outcome should be a balanced strategy where there should be a constant review of the corporate strategy and its implication on present and future resources, and the competitive advantage in the market place.
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